G.R. No. 70987




Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 70987 September 29, 1988 GREGORIO Y. LIMPIN, and ROGELIO M. SARMIENTO, petitioners, vs. INTERMEDIATE APPELLATE COURT and GUILLERMO PONCE, respondents. Danilo A. Basa for petitioner Gregorio Y. Limpin, Jr. Angara, Abello, Concepcion, Regala & Cruz Law Offices for petitioner Rogelio Sarmiento. Sycip, Salazar, Hernandez & Gatmaitan Law Offices and Eugenio C. Lindo for respondent Guillermo Ponce. NARVASA, J.: Once again the parties are before this Court; this time, for a determination of whether or not the equity of redemption recognized in favor of petitioner Rogelio M. Sarmiento in this Court's judgment promulgated on January 30, 1987, still subsists and may be exercised, more than a year after that judgment had become final and executory. The proceedings concern two (2) lots, then covered by TCTs Nos. 92836 and 92837, which, together with two (2) others, were originally mortgaged in 1973 to herein private respondent Ponce by their former owners, the Spouses Jose and Marcelina Aquino. These two lots were afterwards sold in 1978 by the same Aquino Spouses to Butuan Bay Wood Export Corporation. Against this corporation herein petitioner Limpin obtained a money judgment in 1979; and to satisfy the judgment, the two lots were levied on and sold at public auction in 1980, Limpin being the highest bidder. Limpin later sold the lots to his co-petitioner, Sarmiento. Earlier however or a day before levy was made on the two lots in execution of the judgment against Butuan Bay Wood Export Corporation. Ponce had initiated judicial proceedings for the foreclosure of the mortgage over said two (2) lots (together with the two (2) others mortgaged to him Judgment was rendered in his favor and became final; and at the ensuing foreclosure sale, the lots were acquired by Ponce himself as highest bidder. Ponce then moved for confirmation of the foreclosure sale, but the Court confirmed the sale of only two lots, refusing to do so as regards the two which had been subject of the execution sale in Limpin's favor (i.e., those covered TCTs Nos. 92836 and 92837). It was to resolve the resulting dispute that Ponce instituted a special civil action in the Intermediate Appellate Court, impleading Limpin and Sarmiento a indispensable parties respondents. That Court rendered judgment on February 28, 1985 in Ponce's favor; Limpin and Sarmiento appealed; this Court denied their appeal. The judgment of this Court of January 30, 1987 dismissed Sarmiento's and Limpin's petition for review on certiorari of the Appellate Court's decision of February 28, 1985. It in effect affirmed the latter's decision which inter alia ordered the Trial Court "to confirm the sale (of the lots formerly covered by TCT Nos. 92836 and 92837) and issue a writ of possession to ... (Guillermo Ponce) with respect to the aforesaid lots, subject to the equity of redemption of the respondent Rogelio V. Sarmiento 1 Applying the doctrine laid down in Santiago v. Dionisio, a 1953 decision of this Court 2 the Intermediate Appellate Court's decision declared that "the sale to Ponce, as the highest bidder in the foreclosure sale of the two lots in question should have been confirmed, subject to Limpin's (and now Sarmiento's) equity of redemption." This Court's aforesaid judgment also clearly and categorically sustained the exercise by the Appellate Court of jurisdiction over the persons of Rogelio M. Sarmiento and Gregorio Limpin. 3 There can thus be no question that the petitoners herein, said Rogelio Sarmiento and Gregorio Limpin, were affected and are bound by the decision of the Intermediate Appellate Court, and that of this Court affirming it. Rogelio M. Sarmiento, particularly, was aware that the Trial Court had the ministerial duty to execute the Appellate Court's decision, i.e., to confirm the sale and issue a writ of possession as regards the aforesaid lots, subject to the equity of redemption explicitly recognized in his favor in the decisions mentioned. He knew that he had the prerogative to exercise his equity of redemption, if not from the moment that the judgment of this Court became final and executory, 4 at least until the Court a quo, presided over by Hon. Antonio Solano, subsequently confirmed the sale and issued a writ of possession in favor of Guillermo Ponce in June, 1987. 5 He did not try to exercise that right before, at or about the time of the confirmation of the foreclosure sale by Judge Solano. Instead, he instituted no less than two (2) actions in the same Regional Trial Court which were assigned to another branch, presided over by Hon. Teodoro Beltran- attempting to relitigate precisely the same issues which this Court and the Intermediate Appellate Court had already passed upon and resolved adversely to him. For doing so for trifling with and abusing the processes of the courts, and thus unwarrantedly delaying execution of the final and executory judgment against him he and his counsel were both found guilty of contempt and correspondingly punished by this Court, by Resolution dated May 5, 1988. The same resolution also decreed the dismissal of the complaints in both cases and the nullification and setting aside of the restraining or injunctive orders of Judge Beltran. It was not until March 11, 1988-nine months or so after entry of the judgment recognizing his equity of redemption as successor-in-interest of the original mortgagors that Sarmiento finally be stirred himself to attempt to exercise his unforeclosed equity of redemption. On that day he filed a motion with the Court presided over by Hon. Judge Antonio Solano, manifesting that he would exercise the right and asked the Court to fix the redemption price. 6 The Court opined that "this should be the subject of the agreement between Ponce and Sarmiento. 7 Sarmiento then wrote to Ponce on March 23, 1988 offering "P 2.6 million as redemption price for the two lots originally covered by TCTs Nos. 92836 and 92837, now 307100 and 307124. 8 Ponce's answer, dated March 25, 1988, rejected the offer said averred "that the period within which ... (Sarmiento) could have exercised such right ... (had) lapsed. 9 Sarmiento reacted by filing a motion with the Solano Court, dated March 29, 1988, asking it to "fix the redemption price ... and that the implementation of the writ of possession be provisionally deferred. 10 An opposition was promptly filed by Ponce under date of May 4, 1988 11 in which he argued that "Sarmiento's right to exercise his equity of redemption over those lots had long expired," the opportunity to exercise it having presented itself but not availed of "(i) after ... default in the performance of the conditions of the mortgage and (ii) before the Sheriffs sale of the property and the judicial confirmation thereof." According to Ponce, "from October 17, 1982, ... (when) Sarmiento's predecessors-in-interest defaulted in their obligations over the mortgaged properties, up to June 17, 1987, when this ... (Trial) Court confirmed the auction sale of those properties, Sarmiento could (and should) have exercised his 'equity of redemption.'" Judge Solano did not share this view, and ruled accordingly. 12 The issue has been brought to this Court for resolution by Ponce's "Motion for Clarification" dated May 27, 1988 and "Supplemental Motion ..." dated June 13, 1988, as to which Sarmiento has submitted a Comment dated June 17,1988. To the comment a reply has been presented by Ponce under date of August 3, 1988. Ponce states 13 that the term, equity of redemption, means "the right of the mortgagor to redeem the mortgaged property after his default in the performance of the conditions of the mortgage but before the sale of the property or the judicial) confirmation of the (Sheriffs) sale," citing Top Rate International Services, Inc. v. IAC 142 SCRA 473 [1976], or "the right to redeem mortgaged property by paying the amount ordered by the court within a period of ninety days, or, even thereafter but before the confirmation of the sale, invoking Sun Life Assurance Co. of Canada v. Diez, 52 Phil. 275 [1928]. 14 On this premise, he postulates that "from October 17, 1982, the date Sarmiento's predecessors-in-interest defaulted in their obligations over the mortgaged properties, up to June 17, 1987, when the lower court confirmed the auction sale of those properties, Sarmiento could have exercised his 'equity of redemption."' Not having done so within that time, his equity of redemption had been extinguished; indeed, by opting to file "new suits against Ponce ... seeking to annul Ponce's titles over those properties" instead of redeeming the same, he had "waived his equity of redemption (assuming such right existed at the time the suits were commenced)." It is Sarmiento's position, on the other hand, 15 that the "17 June 1987 confirmation of the sale of the two lots could not have cut off ... (his) equity of redemption;" in fact, "Ponce himself, in his 'Urgent Motion' dated 1 June 1987, precisely prayed for the issuance of a writ of possession 'subject to the equity of redemption of Rogelio M. Sarmiento' thereby recognizing Sarmiento's equity of redemption beyond confirmation date," 16 He also argues that he had not been informed of the time when his right of redemption would be cut-off, 17 because he "never received a copy of any Motion for Confirmation, much less notice of hearing thereon in violation of his right to due process;" that to hold otherwise would "render nugatory the decision of the Court of Appeals and this ... Court on the issue;" and that he is entitled to a reasonable time, e.g., a year, for the exercise of his equity of redemption. 18 The equity of redemption is, to be sure, different from and should not be confused with the right of redemption. 19 The right of redemption in relation to a mortgage-understood in the sense of a prerogative to re-acquire mortgaged property after registration of the foreclosure sale- exists only in the case of the extrajudicial foreclosure of the mortgage. No such right is recognized in a judicial foreclosure except only where the mortgagee is the Philippine National Bank or a bank or banking institution. Where a mortgage is foreclosed extra-judicially, Act 3135 grants to the mortgagor the right of redemption within one (1) year from the registration of the sheriffs certificate of foreclosure sale. 20 Where the foreclosure is judicially effected, however, no equivalent right of redemption exists. The law 21 declares that a judicial foreclosure sale, "when confirmed by an order of the court, ... shall operate to divest the rights of all the parties to the action and to vest their rights in the purchaser, subject to such rights of redemption as may be allowed by law. 22 Such rights exceptionally "allowed by law" (i.e., even after confirmation by an order of the court) are those granted by the charter of the Philippine National Bank (Acts No. 2747 and 2938), and the General Banking Act (R.A. 337). 23 These laws confer on the mortgagor, his successors in interest or any judgment creditor of the mortgagor, the right to redeem the property sold on foreclosure-after confirmation by the court of the foreclosure sale-which right may be exercised within a period of one (1) year, counted from the date of registration of the certificate of sale in the Registry of Property. But, to repeat, no such right of redemption exists in case of judicial foreclosure of a mortgage if the mortgagee is not the PNB or a bank or banking institution. In such a case, the foreclosure sale, "when confirmed by an order of the court. ... shall operate to divest the rights of all the parties to the action and to vest their rights in the purchaser." There then exists only what is known as the equity of redemption. This is simply the right of the defendant mortgagor to extinguish the mortgage and retain ownership of the property by paying the secured debt within the 90-day period after the judgment becomes final, in accordance with Rule 68, or even after the foreclosure sale but prior to its confirmation. Section 2, Rule 68 provides that— ... If upon the trial ... the court shag find the facts set forth in the complaint to be true, it shall ascertain the amount due to the plaintiff upon the mortgage debt or obligation, including interest and costs, and shall render judgment for the sum so found due and order the same to be paid into court within a period of not less than ninety (90) days from the date of the service of such order, and that in default of such payment the property be sold to realize the mortgage debt and Costs. 24 This is the mortgagor's equity (not right) of redemption which, as above stated, may be exercised by him even beyond the 90-day period "from the date of service of the order,' and even after the foreclosure sale itself, provided it be before the order of confirmation of the sale. 25 After such order of confirmation, no redemption can be effected any longer. It is this same equity of redemption that is conferred by law on the mortgagor's successors-in-interest, or third persons acquiring rights over the mortgaged property subsequent, and therefore subordinate, to the mortgagee's lien. 26 If these subsequent or junior lienholders be not joined in the foreclosure action, the judgment in the mortgagor's favor is ineffective as to them, of course. In that case, they retain what is known as the "unforeclosed equity of redemption," and a separate foreclosure proceeding should be brought to require them to redeem from the first mortgagee, or the party acquiring title to the mortgaged property at the foreclosure sale, within 90 days, 27 under penalty of losing that prerogative to redeem. In the case at bar, however, there is no occasion to speak of any "unforeclosed equity of redemption' in Sarmiento's favor since he was properly impleaded in the judicial proceeding where his and Ponce's rights over the mortgaged property were ventilated and specifically adjudicated. Under the circumstances obtaining in this case, the plain intendment of the Intermediate Appellate Court was to give to Sarmiento, not the unforeclosed equity of redemption pertaining to a stranger to the foreclosure suit, but the same equity of redemption possessed by the mortgagor himself. The judgment cannot be construed as contemplating or requiring the institution of a separate suit by Ponce to compel Sarmiento to exercise his unforeclosed equity of redemption, or as granting Sarmiento the option to redeem at any time that he pleases, subject only to prescription. This would give rise to that multiplicity of proceedings which the law eschews. The judgment plainly intended that Sarmiento exercise his option to redeem, as successor of the mortgagor. Upon the facts on record, Sarmiento cannot be heard to complain of denial of due process for alleged lack of notice of any motion or hearing for confirmation of sale. The Decision of the Intermediate Appellate Court which he and his predecessor, Limpin, had appealed to this Court specifically ordered the Trial Court to confirm 28 the judicial foreclosure sale in favor of Ponce over the two lots, in these terms. 29 WHEREFORE, the orders dated October 16,1983 and December 19,1983 of the respondent court, so far as they deny the confirmation of the sale of the lots formerly covered by TCT Nos. 92836 and 92837, are SET ASIDE, and the respondent court is hereby ORDERED to confirm the sale and issue a writ of possession to the petitioner with respect to the aforesaid lots, subject to the equity of redemption of the respondent Rogelio V. Sarmiento. Without costs. Given the fact that said appealed orders of the Trial Court had been issued upon motion for confirmation earlier made by Ponce-which was duly served and heard-the aforecited Decision of the Intermediate Appellate Court can be construed in no wise than as a peremptory command to the Trial Court to confirm the sale as directed, motu proprio, and without the need of any further motion or other action on the part of Ponce. The rejection by this Court of Sarmiento's and Limpin's appeal in its own Decision of January 30, 1987, which imported nothing less than a total affirmance of the Decision of the Appellate Court, should therefore have sufficiently alerted Sarmiento that confirmation could come at any time after this Court's Decision became final, with or without any action from Ponce. He cannot, in the circumstances, claim unfair surprise. He should, upon being notified of this Court's Decision, have taken steps to redeem the properties in question or, at the very least, served the Trial Court and Ponce with notice of his intention to exercise his equity of redemption. There was certainly time enough to do this the order confirming the foreclosure sale issuing only on June 17, 1987—had he not occupied himself with the fruitless maneuverings to re-litigate the issues already recounted. Indeed, had he made an attempt to redeem, even belatedly but within a reasonable period of time after learning of the order of confirmation (the record shows he did learn of it within three [3) days after its issuance), 30 he might perhaps have given the Court some reason to consider his bid on equitable grounds. He did not. He let nine (9) months pass, to repeat, in carrying out improper (and contumacious stratagems to negate the judgments against him, before making any such move. Neither can Sarmiento acceptably claim that Ponce, by moving for a writ of possession subject to his (Sarmiento's) equity of redemption, recognized the existence and enforceability of that prerogative beyond the prescribed cut-off date of confirmation of the sale. Such an interpretation of the motion is totally unwarranted, given the fact that said motion was made at a time (June 1, 1987) when there was as yet no order confirming the sale and, since Sarmiento's equity of redemption then still unquestionably existed, there was hardly occasion or for that matter, any reason as far as Ponce was concerned, to provide against its lapsing. Moreover, assuming for the sake of argument that a resolutory period fixed by law may be extended by act of the party in whose favor its expiration would operate, that act must bespeak a clear and unequivocal intent to grant such an extension. No such clear grant can be inferred from the terms of Ponce's motion, which can, and in fact should be, read as a mere affirmation that there existed at the time an equity of redemption in Sarmiento's favor. WHEREFORE, the Court hereby rules that the equity of redemption claimed and invoked by Rogelio M. Sarmiento over the properties originally covered by Transfer Certificates of Title Nos. 92836 and 92837 (now by TCTs Numbered 307100 and 307124), Registry of Deeds of Quezon City, subject of this case, lapsed and ceased to exist without having been properly exercised, on June 17, 1987, with the issuance by the Trial Court of the Order confirming the sheriffs sale (on judicial foreclosure) of said properties in favor of Guillermo Ponce. Cruz, Gancayco, Griño-Aquino and Medialdea, JJ., concur. Footnotes 1 At p. 1; emphasis supplied. 2 92 Phil. 495. 3 At pp. 7-8; and p. 4, Resolution, May 5, 1988. 4 The petitioners' motion for reconsideration of the judgment was denied with finality by the Court's Resolution dated April 27, 1987 (Rollo, p. 363), and entry of judgment was made on June 1, 1987 (Rollo, p. 364). 5 The writ of possession was issued, more precisely, on June 17, 1987 (Rollo, p. 386) 6 Motion (Ex Abundanti Cautela Annex 1 of Sarmiento's Comment dated 17 June 1988. 7 Order, March 17,1988, Annex 2 of same Comment. 8 Annex 3 of Sarmiento Comment. 9 Annex 4, Id. 10 Annex 6, Id. 11 Annex 7, Id. 12 In his Order of April 8, 1988, he declared that Ponce's theory "would render nugatory and empty the decision of the Appellate Court on this issue" (Annex 8, Comment of June 17,1988, supra); and in his Order dated July 8,1988, His Honor denied Ponce's motion for reconsideration dated May 4, 1988. 13 Reply to Comment, Aug. 3,1988. 14 Drawing attention, too, to Quimson v. PNB, 36 SCRA 265; Villar v. Javier de Paderanga 97 Phil. 604; Anderson v. Reyes, 54 Phil. 944. 15 Comment, June 17,1988. 16 Emphasis supplied. 17 Citing Tiglao v. Botones, 90 Phil. 275. 18 Invoking Pascua v. Perez, 10 SCRA 198; Doronila v. Basquez 72 Phil. 572; de Castro v. Olondriz 50 Phil. 725; La Urbana v. Belando 54 Phil. 930. 19 Top Rate International Services v. IAC, et al., 142 SCRA 467, supra. 20 Salazar v. Meneses, 8 SCRA 495; General v. Barrameda, 69 SCRA 182; Gorospe v. Santos, 69 SCRA 191; PNB v. CA, 94 SCRA 357. 21 Sec. 3, Rule 68, Rules of Court. 22 Emphasis supplied. 23 SEE Moran, Comments on the Rules, 1970 ed., Vol. 3, p. 273, citing Gonzales v. PNB 48 Phil. 824, 828; and Martin, Rules of Court, etc., 3rd ed., Vol. 3, p. 289, citing Villar v. Javier de Paderanga 97 Phil 64; Piano v. Cayanong 7 SCRA 397. 24 Emphasis supplied. 25 Anderson v. Reyes, 54 Phil. 944; Grimalt v. Velasquez, 36 Phil. 936; La Urbana v. Belando 54 Phil. 930; Villar v. Paderanga 51 O.G. 5162, cited in Moran, op cit., at p. 273. 26 E.g., by second mortgage or subsequent attachment or judgment. 27 The period fixed in Section 2, Rule 68 for the mortgagor himself to redeem. 28 Something which it had earlier refused to do. 29 Rollo, p. 26. 30 Rollo, p. 382. The Lawphil Project - Arellano Law Foundation